Online Food Delivery Companies GrubHub and Seamless to Merge

GrubHub and Seamless, two startups that let people order restaurant takeout without leaving the sofa or even picking up the phone, said Monday they are merging.

GrubHub CEO Matt Maloney said the private companies’ existing investors aren’t cashing out. That means existing stockholders are rolling their stakes in together, as opposed to a traditional merger in which one company’s stockholders buy out the other’s. Maloney, who will be CEO of the combined company, declined to discuss the companies’ combined valuation.

In an interview, Maloney got in a jokey poke at Tumblr, whose $1.1 billion acquisition agreement overshadowed his company’s news. “They made all of $13 million last year,” Maloney said, referring to Tumblr’s reported revenue.

Seamless and GrubHub say their combined 2012 revenue was “well in excess” of $100 million, on a joint $875 million in food sales through each company’s online food-ordering systems.

Both companies appeared to be on an independent path to an initial public offering before merger talks started in recent months. “Had this opportunity not arisen…we probably would have pursued that,” said Bill Gurley of Benchmark Capital, which is an investor in GrubHub.

Maloney said GrubHub and Seamless make sense in combination, and he said it would have been tougher to pull off a merger if either or both companies were public.

Still, consumer-Internet companies have had a bumpy track record in recent years, making potential public offerings for GrubHub and Seamless not a sure thing. For every public-market success story like Yelp, there are startups like Groupon and Facebook that are trading below the stock prices at which they went public.

Maloney said joining forces now made more sense. “There’s so much obvious complementary benefits to putting the two together,” he said.

Seamless has a significant roster of restaurants it works with in New York City, where it started out, and GrubHub is big in its hometown of Chicago. Seamless has a significant foothold among law firms and other corporate clients who use Seamless to place food orders for employees pulling long hours. GrubHub, thanks to the acquisition of Campusfood more than a year ago, has a presence with hungry college students. GrubHub is known for its back-end technology to make effective online ordering at mom-and-pop restaurants, while Seamless has won raves for its mobile ordering apps for consumers.

After a weekend where tech writers were joking about “Tumbloo” (Yup, that’s Yahoo + Tumblr), Maloney said GrubHub and Seamless will remain separate brands. So don’t bother snapping up URLs for “Grubless” or SeamHub.”